Net Income Tripled and the Margin Still Cracked
Every SeaBank filing covered on this blog so far - June 2023 and full-year 2023 - told some version of the same story: an eye-popping net interest margin (NIM») north of 18%, undercut by provisioning that kept growing faster than the income it was supposed to protect. Q1 2024 is the first quarter where that specific tension breaks in the opposite direction. NIM fell to 15.41%, down from 19.57% a year earlier and from 18.39% for the full 2023 year - the sharpest single-period margin move this coverage has seen - while net income still nearly quadrupled to Rp51,588 million (from Rp13,470 million) because impairment charges actually fell 33.3% year-on-year, not because the underlying lending business generated more income. Net interest income itself shrank 19.6% to Rp1,245,077 million.
This is a genuinely different failure mode than the one flagged in the two prior posts. Before, the concern was provisioning eating an otherwise-healthy and growing margin. Now the margin itself is compressing - deposits grew 17.9% quarter-on-quarter (largely a Rp2.5 trillion jump in current accounts, more than 60% growth in that single line) while the loan book grew just 1.9% over the same three months, meaning SeaBank is paying to hold a lot more funding than it's currently able to lend out at its historically high rates. The bottom line looked excellent this quarter because credit costs happened to ease; the top-line margin - the thing that actually made this bank interesting to a first-time reader - moved the wrong way for the first time.
The Prescription
The Joint Financing and Loan Channeling segment - already carrying essentially the entire loan book by the FY2023 filing - needs to keep growing loans at least as fast as deposits are coming in, or this quarter's LDR» drop (from 85.93% at Dec 2023 to 74.29% at Mar 2024) becomes the new normal rather than a one-quarter blip. A bank whose entire investment case rests on an unusually high NIM cannot let deposit growth consistently outrun loan growth for more than a quarter or two without that margin eroding for real - this quarter is the first data point suggesting it might already be starting to happen, not yet proof that it has.
What it should stop doing: let a lighter provisioning quarter substitute for actually explaining the margin move. Nothing in this bare regulatory filing addresses why NIM fell four points in a year - whether it's competitive deposit-rate pressure, a shift in loan mix, or simply the deposit surge outpacing lending - and a reader is left to infer it from the balance sheet alone. The 33% swing in impairment costs (which flattered this quarter's net income) is the kind of number that can reverse just as quickly as it improved; it shouldn't be read as the margin problem having resolved itself.
Key Financial Metrics
Q1 2024 vs. Q1 2023 (P&L, three months ended March 31), and Mar 2024 vs. Dec 2023 (balance sheet) - bank-only ("Individual")
FX: IDR 15,848 = USD 1 (March 31, 2024 close, applied throughout for consistency).
| Metric | Q1 2024 (IDR) | Q1 2024 (USD) | Q1 2023 (IDR) | YoY |
|---|---|---|---|---|
| Net Interest Income | Rp1,245,077M | ~$78.6M | Rp1,547,885M | ⚠️ -19.6% |
| Non-interest operating income (expense), net | Rp(1,182,578)M | ~-$74.6M | Rp(1,532,958)M | ✅ cost narrowed 22.9% |
| Operating Income | Rp62,499M | ~$3.94M | Rp14,927M | ✅ +318.7% |
| Net Income | Rp51,588M | ~$3.26M | Rp13,470M | ✅ +283.0% |
| Balance sheet metric | Mar 2024 (IDR) | Mar 2024 (USD) | Dec 2023 (IDR) | Change |
|---|---|---|---|---|
| Total Assets | Rp32,340,741M | ~$2.041B | Rp28,230,927M | ✅ +14.6% |
| Loans (Kredit yang diberikan) | Rp18,230,288M | ~$1.150B | Rp17,889,027M | ➖ +1.9% |
| Total Deposits (Giro + Tabungan + Deposito) | Rp24,539,451M | ~$1.548B | Rp20,818,298M | ✅ +17.9% |
| Total Liabilities | Rp26,303,847M | ~$1.660B | Rp22,251,244M | ⚠️ +18.2% |
| Total Equity | Rp6,036,894M | ~$380.9M | Rp5,979,683M | ➖ +1.0% |
Operating Income is the bank's own disclosed "Laba (Rugi) Operasional" line. This quarterly filing is the same bare OJK regulatory publication format as prior quarters, with no cash flow statement and no notes to the financial statements (no quarterly_report/annual_report-style footnotes exist for this specific document, unlike the FY2023 annual report), so no footnote-mining findings are reported this quarter.
Net interest income shrank for the first time in this blog's coverage of SeaBank - the drop in impairment costs that lifted net income this quarter is a separate, more volatile line, not evidence the margin compression has been addressed.
Key Operational Metrics
Funding & Liquidity
- Loan-to-deposit ratio (LDR»): 74.29% (Mar 2024), down from 85.93% (Dec 2023) but still well above the 57.26% reported a year earlier (Mar 2023) - deposits (+17.9% QoQ) simply outran loan growth (+1.9% QoQ) this quarter, mostly on a surge in current accounts (Giro), which jumped 61.6% from Rp4,068,313 million to Rp6,576,232 million in three months.
Credit Quality
- NPL» ratio - gross: 2.02% (Mar 2024), improved from 2.30% (Mar 2023).
- NPL ratio - net: 0.18% (Mar 2024), up slightly from 0.15% (Mar 2023).
- CKPN (loan-loss reserve) to earning assets: 8.11% (Mar 2024), up from 6.16% (Mar 2023), though down from 9.05% at Dec 2023 - consistent with the 33.3% YoY drop in this quarter's impairment charge.
- CAR» / KPMM: 33.17% (Mar 2024), down from 41.92% (Mar 2023) and from 34.93% (Dec 2023) - still nearly 4x the regulatory minimum.
Profitability & Efficiency
- NIM»: 15.41% (Q1 2024), down from 19.57% (Q1 2023) and from 18.39% (FY 2023) - the compression flagged above, and the first quarter-over-quarter decline in NIM this blog has recorded for SeaBank.
- ROA: 0.82% (Mar 2024), up from 0.22% (Mar 2023).
- ROE: 3.88% (Mar 2024), up from 1.03% (Mar 2023).
- BOPO»: 96.12% (Mar 2024), improved from 99.24% (Mar 2023).
- Cost-to-Income Ratio» (CIR): 28.77% (Mar 2024), worse than 17.88% (Mar 2023) - a real divergence from BOPO's improvement, since CIR excludes credit costs and BOPO doesn't: operating costs excluding provisioning actually grew faster than operating income this quarter, and it's only the lighter provisioning charge that let BOPO (and net income) look better anyway.
Not available in this filing: a segment breakdown for this specific quarter (the three-way Conventional Loan / Joint Financing and Channeling / Funding split is only disclosed in the annual report, most recently for FY2023), transacting-user or merchant counts, and any deposit-cost (funding rate) disclosure.
Target Valuation Range
No numeric valuation range is computable for SeaBank Indonesia - there is no independently traded equity or debt for this entity to value.
SeaBank Indonesia remains wholly owned by Sea Limited (85%, through PT Danadipa Artha Indonesia) and PT Koin Investama Nusantara (15%), unchanged since this blog's first SeaBank post. There is no share price, market capitalization, or multiple that can be honestly built for this entity - Sea Limited's own NYSE listing (ticker SE) reflects its entire group, not this one subsidiary bank, so it isn't used as a stand-in here either.
A tripled net income headline this quarter is real, but it's built on a lighter credit-cost quarter sitting on top of a margin that's now visibly compressing - the first time in this blog's SeaBank coverage that the bottom line and the metric that actually explains the business have moved in opposite directions.
PT Bank Seabank Indonesia's quarterly published financial statement ("Laporan Posisi Keuangan Triwulanan"), bank-only/individual basis, for the period ended March 31, 2024, signed by the bank's board of directors in Jakarta on May 15, 2024, per Indonesian Financial Services Authority (OJK) bank transparency and publication regulations.